Busted: Bankers and The Global Economy

September 4, 2008

Inflation: Sick of the “I” Word

Yes. Every American knows what the Fed is reluctant to admit. The economy is struggling. Prices remain high. Booyah. It’s a revelation.

It took the Fed and the federal government almost 9 months to admit the truth about the mortgage, banking and finance debacle. They had all the facts and saw it coming. They looked the other way in the hope that you might not notice or in the vain hope that a pied piper might come along and enchant all the rats. Shortly after that mortgage and finance truth was reinforced by reality, Bear Stearns collapsed, threatening the fall of U.S. investment bankers. Now the Federal Reserve has effectively nationalized every important sector of the banking community within the United States in the effort to keep the show running in the spirit of confidence. The federal government a/k/a the American taxpayer is theoretically on the hook for the entire expense, enslaving the nation to an uncertain future unless we wise up.

We’ve heard about the “R” word, but never has another word meant more to a nation or a global economy in consternation than the infamous “I” word that economists, writers and politicians cannot fail to utter in quiet undertones of fear. What make the “I” word so dangerous is the lack of power against it. Inflation isn’t just a cycle. Inflation is a symptom of unbridled lack of discipline and theft by the Federal Reserve and central bankers themselves. The fact is that authorities have decided that if we mention inflation enough, the public will actually stop taking it seriously.

Inflation has been described as “creeping.” Inflation may well be creepy and may well be advancing, but inflation has showed its ugliness rather dramatically. The nation faces higher inflation than in more than 20 years. Even worse, the nation flutters on the brink of truly nasty stagflation.

The officials in charge won’t readily admit such a thing. First, we have invented hard and fast rules about such topics. Economics is a science say many experts. We have strict definitions for these kinds of things say leaders. That depends on what school of thought you choose to believe. Still, you may be right if you consider economics to be on the same level of science as evolution. The best and the brightest are still unresolved about both except where it fits an agenda for power as they constantly update the facts in an effort to make their case.

In the meantime, prognosticaters are expecting a “rough patch” to come up soon. This patch could happen at any time. Christmas is going to be very bad, business pundits say in prophecy. Bad depends on the level of expectations. If consumers continue to retrench by only buying what they need, the economy is doomed in the eyes business retailers and tax collectors.

American consumers may be in a “slump”, but business and government is in the midst of a crisis. Government has grown to depend on more consumption and rosy projections to raise operating funds by taxation. Business has grown to depend on cheap foreign labor to slash expenses while raising prices. Inflation comes as much from greed and usury of the little guy on both sides as it does from devaluation of American currency and weakness in the dollar.

Food and fuel prices have knocked inflationary values out of the park recently. The Fed says that fuel prices have moderated somewhat, but are still elevated. Considering that the average barrel of oil averaged about $37.00 in 2004, the word elevated is an understatement.

Then the Fed blithely states that wage gains are modest. This is an obscene statement considering that wages have been flat for years, even when adjusted continually for “nominal 3 percent inflation.” No danger for inflationary pressure here because employers are laying off workers in droves in an effort to save the bottom line of business. Employers haven’t been known to be “overly generous” in at least 3 decades.

Manufacturing is weak or declining as corporations close down facilities and offshore jobs to foreign nations with significantly lower wage rates and taxation. The things that America still manufactures like steel, heavy machinery and aircraft are cheaper for foreign buyers because of the weakness of the devalued dollar. This possibility combined with stimulus payments are being given credit for growth figures in the second quarter of 2008.

The largest problem with concepts like recession and inflation is that like every other economic idea, there isn’t much agreement on much of anything. Now that is science. ~ E. Manning

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